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Toy and Game Forecast

Feb 1, 2011

From radio band helicopters to rubber band bracelets, it is not easy to figure out the next hot toy. However, suppliers with years of experience have some ideas, and they see a few common trends emerging. It looks like 2011 will be big for licensed games and toys, as well as increasingly sophisticated electronics. Moreover, wholesalers are improving the ways they sell these products online.

Kenny Huang, Vice President of business development for Japan Video Games, says that products with a media tie-in are golden. "Any merchandise that stems from popular video games or movies are the best investments, such as those from Disney, Pokemon, Hello Kitty, and Super Mario," he says. "Most toy merchandise comes from games and movies. These days, this merchandise expands onto impulse driven, counter-style displays such as candies, snacks, drinks, and even gum." He adds that established franchises, with games and movies that continue to be released, are good bets. "Most toys go through their phases," he says, "such as ZhuZhu Pets and Tickle Me Elmo, but we've found the toys that have the longest shelf life are those that have the most media and game tie-ins." Keeping on top of the next big thing is not easy. "We're always on the hunt for the best of the best," says Huang. "I look in strange places to find items to sell, but I usually head to Google and just type in 'Plush/Toys' to see what comes up," he explains. "After I see an item that pops up more often than not, I proceed to track down potential suppliers and see if the products make financial sense for us." However, Huang says that his customers are even savvier than he is. "In most cases, our clients are the ones that keep on top of trends much more than we do. We ask our clients to point us in the right direction," he says. "Always be the first one in, first one out."

The Japan Video Games site is a five-year-old, full-featured online store. There is also a blog that the company uses to display new products. The unique items he offers there make it a strong competitor, according to Huang, and he is adamant about the need to keep on top of tech issues. "I recommend using all social networks to get the word out, specifically Facebook and Twitter. RSS feeds and blogs are a must, and constant communication to your customers is an absolute must."

Charles Potter, president and CEO of Legendary Games Inc., says that although he is not personally a fan of new gizmos and gadgets, he knows they are vital to his business. He won't answer his cell phone voicemail, he says (laughing), but he is investing in the latest tech. "We just brought out a new app called, 'Let's have a Farkel party,' which is now available for phones," he says. "I'm not very high tech myself, so we're doing it through a third party. I think it's a 99 cent thing." He knows that Facebook and Twitter are important. "We're going to get into more social network items here in the next 12 months for sure," he says. His website does not have a shopping cart, and primarily supports the players of the games he sells. "It's mostly for individual customers looking to buy the game. When you look at the website, it gives the retail price, and we don't sell online. They have to call us, and there's a reason for that. We ask where they're from, and if we have a retailer in their area, we refer them to the store."

This low tech approach has the advantage of emphasizing the retailers that buy from Legendary Games. As Potter explains, "We've always focused on the mom and pops, Hallmark shops, and gift and game stores. That's who we sell to mostly. We've avoided selling to the big box stores, and have always protected our small merchants by not going to those stores." Potter sees the current trend in games as the culmination of a decade long high.

"After 9/11, family games just went crazy," he says. "Our sales just grew and grew after 9/11, because people were spending more time at home with their families, I think. What we're finding is that more and more stores that never carried games before are starting to carry them. Drug stores, fabric stores and gift shops are all looking at games. The personal, interactive game market is getting huge, and I think that'll continue to grow for the next few years." While he agrees that electronic toys are hot, he thinks games have not peaked. "While the electronics and tech stuff is growing, and will continue to grow, the trend in personal interaction games is growing just as fast," he says.

Eduardo Perl, president of Emirimage Corp., has made a 25 year career out of high tech toys, specializing in radio-controlled cars and helicopters. "These toys, especially the helicopters, are becoming more and more sophisticated every year," he says. "Most of the helicopters we carry, which were sold only in hobby stores because of their high prices, are now available at much lower prices. Helicopters that several years ago were only available for several hundred dollars, customers can now buy for $50."

For 2011, look for lower prices and greater sophistication. "For our new 2011-2012 line, we are starting to introduce new, four-channel helicopters," he says, explaining that these are taking the place in the market of the older three-channel versions. Emirimage makes its own models and has warehouses in Miami, Los Angeles and China. "We do a lot of quality control in production," says Perl, "using our own packaging and trademarks. All our goods are FCC approved and ASTM approved."

The company website does not allow online purchases, but does serve as a full catalog. "The site is very important for showcasing products. We sell wholesale only, not to final customers," says Perl, "and the site is very important to our own distributors and retail stores that buy from us. They can see the different functions and features and can look at items. You can open every item and see the details. We showcase the box for the customer as well, to let them know about the packaging." Moreover, business has indeed been good. "We have been growing every year," says Perl. "This year, compared with last year, we're up 35 percent. Our company is not the cheapest in the whole market. We're very competitive, but we are focused on good quality merchandise and fewer headaches for customers. We try to give excellent customer service, and a very high percentage of our customers come back year after year, because they are really happy with our quality and service."

David Nghiem, sales manager at Toy Galaxy, is also proud of his company's private label. "We've always focused on our attractive private label, which shows quality and value for our customers," he says. The company slogan, prominent on its website, reads, "Our Private Label Makes the Difference." The 15-year-old toy wholesaler mostly targets dollar stores in the U.S. and Canada. Nghiem says the hottest toys have been shaped rubber band bracelets, and looking ahead, Toy Galaxy sees a lot of promise in merchandised toys. "With the upcoming release of the movies, 'Happy Feet 2' and 'Cars 2,' we are excited to be the sole distributor of licensed 'Happy Feet 2' toys in Canada, and will be bringing many more 'Cars 2' themed toys," he says. The company keeps on top of the trends in several ways. "Our buyer travels four times a year to the Orient, as well as extensively across the country, to bring in as many new toys as possible," says Nghiem, "We also follow trends from trade shows, salespeople and our clients."

Toy Galaxy has had its website for five years, and it is fully ecommerce enabled, a key strength, according to Nghiem. "Customers are able to place an order online without leaving their home or store," he says, and there is a quick order option for customers who know exactly what they want to buy." The site, which requires an easy registration, can tell customers what is not in stock, and when to expect items to arrive.

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